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Jakarta Post

Omnibus law will help prevent capital outflows

  • Dimas Hermawan Novi Adhi and Toriq Rahmansyah

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PREMIUM
Jakarta   /   Mon, December 16, 2019   /  09:18 am
Omnibus law will help prevent capital outflows The omnibus bill will bring a significant change by shifting the tax system from currently a worldwide (residence-based) system to a territorial system.economy (JP/Nedi Putra AW)

The holding period for assets repatriated under the 2016 tax amnesty will end later this month. After that, those assets can either be retained at home or taken back overseas. There is certainly great concern that such capital outflows will put pressure on the rupiah, affect the balance of payments and economic growth. Therefore, preventing the outflow of repatriated assets is important as the country still needs significant investment to support its economy. Nearly 1 million taxpayers participated in the amnesty by declaring assets and paying a redemption fee. Around 75 percent of the participating taxpayers were individuals. The Taxation Directorate General collected more than Rp 114 trillion (US$9 billion) in redemption fees. The ratio of redemption fees compared to gross domestic product was around 0.8 percent. This ratio was the highest among other countries that had granted a...

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